Planning for a loved one who may have a disability or have some other form of vulnerability such as a drug addiction, financial susceptibility or pressure from undue influence can present many challenges. Often, there is a need to find a balance between ensuring that the beneficiary is looked after for their lifetime and ensuring that they do not have control over the funds.

Where there is a disability involved, the beneficiary may be in receipt of a government disability pension and in this case, one of the key objectives in an estate plan may be to preserve pension eligibility.   

Planning for Vulnerable Beneficiaries

When planning for vulnerable beneficiaries, there are a number of matters that need to be considered when determining the appropriate provision and structure for the beneficiary. These include:

• Does the beneficiary have capacity or do they have other people making decisions on their behalf, eg, an attorney appointed under an enduring power of attorney or an administrator or guardian appointed by VCAT;
• Is the beneficiary in receipt of a disability support pension and is preserving this pension and the associated care and health services, a priority?
• What are the medical, accommodation and other needs and requirements of the beneficiary?
• Are there any known undue influences or illnesses to guard against?
• What is the size of the estate and non-estate interests of the person who wishes to make provision for the vulnerable beneficiary, and are there any other beneficiaries likely to benefit?
• Does the beneficiary have any children or other dependants that will need to be considered?

Trusts for Vulnerable Beneficiaries

For many vulnerable beneficiaries, the straightforward option of outright ownership and control can have significant pitfalls.  It can expose assets to the consequences of unsatisfactory decision making or cause a beneficiary to lose their disability pension and healthcare and services associated with receiving that pension.  Paying a superannuation pension to the beneficiary is generally also not an option these days as these benefits can be readily accessed by the person and there can be broader tax and superannuation consequences.

Special Disability Trusts (SDTs) and Protective Trusts are two types of trusts that may be considered as a means of benefitting a vulnerable beneficiary. Advice should be sought on the appropriateness of either or both of these types of trusts having regard to the particular circumstances and needs of the beneficiary.

Special Disability Trusts

SDTs are trusts that primarily provide for the care and accommodation of a person with a severe disability. They potentially allow for income and assets means tested pension concessions for a principal beneficiary with a severe disability.   

The key characteristics and requirements of a SDT are:

1. They can be established by family members during their lifetime for the benefit of a vulnerable beneficiary, or on the death of the family member via their Will;
2. The principal beneficiary must have a “severe disability” which is defined according to the Social Security Act;
3. An assets test assessment exemption of up to $681,750 (indexed 1 July each year) is available to the principal beneficiary.  This means that the amount is not counted towards the assets test for determining eligibility for the disability pension;
4. If eligible family members of the principal beneficiary gift an amount to the trust, there is a combined gifting concession of up to $500,000 if such family member is also receiving or might be eligible for a government pension (eg, old-age pension);
5. Dutiable property (such as real estate) gifted into a SDT may be eligible for stamp duty concessions or exemptions (the laws in each State will differ).  For example, in Victoria, dutiable assets of up to $500,000 gifted to a SDT will be exempt from stamp duty.  If the gifted asset is valued at over $500,000 duty will only be payable on the value exceeding that amount.
6. Where a disposal of an asset would ordinarily raise a capital gains tax (CGT) liability, then if the asset is gifted to a SDT, there is a full exemption from CGT.  The cost base of the CGT asset is also refreshed to its market value at the time it is gifted to the SDT.
7. Funds placed in the trust are intended to meet the care and accommodation expenses of the principal beneficiary but up to a certain amount each year can be spent on other discretionary expenses (currently $12,250);
8. The trustee must either be a professional trustee or two or more individuals;
9. The terms of the trust deed must reflect the model trust deed endorsed by Centrelink and;
10. There are strict reporting requirements including providing annual financial statements and conducting independent audits.

Protective Trust

A Protective Trust is another type of trust that can be established to financially protect a vulnerable beneficiary who has not been assessed by Centrelink as having a severe disability.  A Protective Trust is free of the constraints of a SDT which means that it can used for broader purposes such as providing financial support for recreation, entertainment, holiday travel, personal furniture and fittings and personal belongings.

The capital in a Protective Trust and any generated income is fully assessed for the purposes of the Centrelink means testing. Unlike a SDT, there is no stamp duty concession or exemption for gifting dutiable property into a Protective Trust nor an exemption from CGT.

The Protective Trust may be more suited where pension eligibility is not a priority and decisions regarding the distribution of income and capital distribution are made by someone other than the principal beneficiary. For example, a protective trust is established with an independent controller to provide for a beneficiary who has a drug addiction.

Establishing a SDT or Protective Trust

A SDT and Protective Trust can be established by deed or via Will.

A SDT or Protective Trust that is provided for in a Will does not come into effect until the Will-maker dies.  If a Will contains provisions for a SDT and Protective Trust, an expertly drafted Will should give the executors discretionary powers to consider the beneficiary’s circumstances, needs and any other relevant factors to determine whether they hold the beneficiary’s share of the estate in a SDT, Protective Trust or a combination of both trusts. For example, the executors may determine to hold such of the inheritance that will not impact on the beneficiary’s pension eligibility in a Protective Trust where the funds can be used for broader purposes. 

How can we help

For over 40 years Moores has been providing legal assistance for people who wish to provide for a loved one with a disability or other vulnerability. We also provide advice to clients and their financial advisors with respect to any taxation, state duty or Centrelink implications upon establishing a SDT or Protective Trust.

If you or someone you know would like to talk with us about estate planning, please do not hesitate to contact us.

Recently, you might have seen the media splash that was the launch of the Australian Banking Association (“ABA”) campaign to stop elder financial abuse (if not, you can read about it on their website). The ABA is calling for nationally consistent powers of attorney laws, a national powers of attorney register and the establishment of somewhere to report abuse in each state that can investigate and act.

Why, you might ask, has the ABA launched a campaign against elder financial abuse? It could be explained on the basis that banks are best placed to identify suspicious transactions and to speak with their customers about suspicious transactions.  Banks already operate subject to anti money-laundering regulation and report any cash transaction over $10,000 to AUSTRAC. Banks already have internal fraud monitoring systems – you, like me, may have received a call about possible fraud when trying to book overseas holiday accommodation on your credit card.

However, these issues are not new. The harmonisation of states’ powers of attorney regimes has been under discussion and development by stakeholders for many years. Recommendation 5-3 of the Australian Law Reform Commission’s 2017 report Elder Abuse – A National Legal Response was that a national online register of enduring documents and Court/Tribunal appointments should be established after agreement on nationally consistent laws. 

So what has changed?

Federal and State governments are increasingly taking steps to address elder financial abuse. The community sector is working hard on awareness raising and primary prevention. Private enterprise is now joining the call to action but not necessarily for benevolent reasons.

Private enterprise – whether a bank, superannuation fund, private advisers, aged care facilities – regularly deals with substitute decision makers whether attorneys or Tribunal appointed administrators or guardians. Sometimes the personal legal representative does not understand limitations on their appointment, sometimes those dealing with them do not. It is a risk to any organisation to allow a person not properly authorised to act on behalf of a principal, and they may be held liable.  We have assisted elderly or vulnerable clients where a family member or friend is able to obtain personal information about the principal, or carry out transactions on behalf of the principal, despite not being properly authorised. For example, a guardian cannot carry out financial or legal transactions on behalf of a principal. Or an enduring attorney may purport to carry out financial or legal transactions, but that will be unlawful if their powers commence only on the principal’s loss of capacity and there is no medical evidence that is the case.

Banks appreciate the liability risk to them of allowing transactions to occur without proper authorisation. There are a growing number of determinations by the Australian Financial Complaints Authority in favour of an applicant against a bank for allowing unauthorised transactions to occur. 

While we applaud the ABA for drawing attention to the growing problem of elder financial abuse, we also remind our clients and their advisors that losses can be recouped from third parties where transactions are carried out without a valid mandate or proper authorisation.

How we can help

If you would like more information regarding this article or to speak to an Elder Financial Abuse expert, please do not hesitate to contact us.

Several recent cases in NSW and Victoria have highlighted the difficulties that can arise in family provision claims by adult children.

Cases

In Piercy v Douras [2019] NSWSC 1013 (9 August 2019 per Henry J), an adult son received no provision from his father’s estate.

The estate was valued at $4.1m at date of death. However, family law property orders were made between the deceased and his ex-wife, the applicant’s mother which reduced the estate to only $743K at the time of the hearing. That was to pass to the deceased’s second wife of a few weeks (total relationship less than 3 years in duration) who had limited assets & employment prospects.

The son and the father were estranged, but this was only for less than a year before the date of death and there was no disentitling conduct on the son’s part. There was an expectation the applicant would inherit from his mother. The son’s claim failed, and he had to bear his own costs.

In Firth v Reeves [2019] VSC 357 (7 June 2019 per Dixon J), an elderly widow, Cecily, made a will leaving her estate to her daughters Glenda and Roseann. Under the will, Glenda was to receive two-thirds and Roseann the remaining one-third.  When Cecily died in 2017, Roseann brought a claim seeking half of her mother’s estate. She contended that one-third was inadequate, and sought one-half of the estate.

The estate was worth $5.52 million when Roseann first brought her claim, but had increased to $8.15 million under the executors’ management by the time the case was heard. As a result, the one-third she ultimately stood to receive under the will was similar in value ($2.72 million) to what half the estate was worth at the time of her mother’s death ($2.76 million).

The Court found that Cecily’s will made sufficient provision for Roseann, and dismissed the claim. The Court found:

• Cecily did not have a duty to treat her daughters equally in her will. That the estate was in part derived from family inheritances did not increase Cecily’s moral obligation to her children, or oblige Cecily to leave her estate equally between them.  
• Roseann’s claim failed as she could not establish need or any other consideration to warrant further provision. As the will left her an amount that was sufficient for her needs, the Court had no jurisdiction to change the distribution of the estate.  This was the case even though the estate was relatively large.

In Wengdal v Rawnsley [2019] NSWSC 926 (18 June 2019 per Hallen J), two sisters Jill and Susan were pitted against each other. Their mother had a small estate valued at $297k. She left Jill a gift which equated to $34k and the balance to Susan.  Jill had for many years been independent, and self-sufficient. The mother had instructed the lawyer that Susan did everything for her and was the “only one who cares”. Whilst Jill had some needs, she had home (with a small mortgage), a car, superannuation and a secure income (by way of pension). The mother knew all of this. The Court dismissed the claim and ordered the plaintiff to pay the estate’s costs.

Key lessons

These cases highlight:

1. The concept of fairness in the sense of “equality” between children has little bearing in family provision claims. 
2. In order to successfully challenge a parent’s will, adult children need to be able to demonstrate financial need.
3. However, financial need alone is not enough.  A Court can only award provision to the extent that is required for someone’s proper maintenance and support in all the circumstances. It cannot rewrite a will purely because the distribution is unequal between family members, or someone feels that the will is unfair. 

Conclusion

Family provision legislation is designed to provide proper maintenance where a will or intestate distribution is inadequate for a person’s needs. While a parent generally has a moral obligation to provide for their children, this does not equate to a testamentary duty to treat their children equally.

However, if a parent does wish to dispose of their estate unequally between children, they should be very careful as there is always a risk of litigation. They should always get professional estate planning advice to reduce the risk of challenge.

How we can help

For expert advice and guidance, please do not hesitate to contact us.

Capital gains tax (CGT) is a tax payable when you sell an asset for a profit.

Fortunately, it does not apply to your family home. This exemption also applies if you have died, provided that the home is sold and settled by your executors within 2 years. 

But what if there is a delay with the estate? For example, if there is litigation such that the home cannot be sold in that time?  Up to now, it was “bad luck” – whilst the Commissioner does have some discretion, it was generally the case that CGT would be payable (although at a reduced rate).

Recently, however, the Commissioner has provided a Practical Compliance Guideline (PCG 2019/5), which provides a useful guide to executors, beneficiaries and their advisors. The benefit of this guideline is that now, if certain conditions are met, the executor or beneficiary can rely on an additional 18-month period. This means there could effectively be a 3.5 year exemption period. 

The guideline sets out that the beneficiary can rely on this period for situations where for example, there has been a challenge to the estate, or the deceased’s will contained a life interest that delayed the disposal of the property. Another example would be if the property sold, but settlement was never completed through no fault of the executor or beneficiary.

Importantly, the guideline sets out certain delays which would not qualify for the extended concessionary period including:

1. Waiting for the property market to improve before selling;
2. Refurbishing the property to improve the sale price;
3. The executor or beneficiary’s inconvenience in organising the sale of the property; or
4. Unexplained inactivity by the executor in administering the estate.

If the executor or beneficiary meets all the conditions in the guideline, they must keep records evidencing this compliance.  

The Commissioner’s discretion still exists to consider other factors which may have caused delay to the disposal of the property.

Next steps

To find out whether your situation qualifies for the extended concessionary period, and for clarity about what your obligations are, please do not hesitate to contact us.

There has been much talk in recent months regarding the payment of superannuation on annual leave loading. Until early this year it was common for employers not to make superannuation payments on annual leave loading.

Ordinarily, superannuation is payable with respect to ordinary time earnings (OTE), that is clear. What is unclear however, is whether annual leave loading constitutes OTE.

The ATO has recently clarified that superannuation may be payable on annual leave loading.

Where does annual leave loading come from?

Annual leave loading is an entitlement which contained in most industrial instruments. This could be a Modern Award or Enterprise Agreement.

Annual leave loading is generally an additional payment of 17.5% provided to an employee on top of their base rate of pay during periods of annual leave. Annual leave loading was initially incorporated into modern awards to compensate employees who typically receive overtime and penalty rates during work periods for the shortfall in wages during periods of annual leave.

Through the review of modern awards and enterprise bargaining, the entitlement to annual leave loading has been extended to classifications of employees that would not generally perform work attracting overtime and penalty rates.

In determining whether annual leave loading constitutes OTE, you must consider where the entitlement to annual leave loading comes from and its purpose.

So is superannuation payable to my employees?

Unless the industrial instrument which applies to your employees specifically states annual leave loading is provided to compensate an employee for the lost opportunity to work and be paid for overtime, it is likely that superannuation is payable on annual leave loading.

What should I do?

Employers should take the following steps to ensure that they are complying with their superannuation obligations:

1. Review the industrial instrument your employees are covered by – this might be a Modern Award, Enterprise Agreement or Contract. Where there is an entitlement to annual leave loading, test whether the instrument expressly provides that annual leave loading is for the purpose of compensating employees for lost overtime. It is unlikely you will find this explicit phrasing, however you may be required to look back to Pre-Reform Awards, those that existed before Modern Awards commenced, to determine where the entitlement for annual leave loading was established.
2. Review your current payroll practices – up until the ATO’s clarification earlier this year, it was a common understanding that superannuation was not payable on annual leave loading and it is possible that is how your payroll practices are currently set up.
3. Revise your payroll practices if necessary – given the ambiguity and the lack of clarification by the ATO, until now, it will be more important to focus on your practices moving forward and if required, amend your payroll systems to enable payment of superannuation on annual leave loading.

How we can help

If you need assistance in determining whether the industrial instrument covering your employees entitles them to annual leave loading in compensation for the lost opportunity to work overtime, please do not hesitate to contact us.

Moores’ recent success in assisting Carey Baptist Grammar School to obtain an exemption under the Equal Opportunity Act 2010 (Vic) (the Act) to lawfully discriminate in student enrolments, is an example of an effective and strategic pathway for schools to ensure an appropriate gender balance in their student cohort without breaching their legal obligations.

Who wins in the gender balance?

In our analysis of the gender balance in co-educational schools in Victoria, 90% of schools reported more male students than female students.^[1] At some schools, this was as high as 50% more male than female students. Intrinsic to the strategic plans of many such schools is the principle that, in order for the benefits of co-education to be achieved, a gender balance is required. Schools increasingly want to reflect modern society, where people of all genders work and socialise together, and school students are no longer groomed for distinct gender-bound pathways.

Where there is a lack of equitable gender balance, this can lead to a domino effect, in which female students are withdrawn by their parents due to noticeable imbalance in gender in the student cohort.

What does the law say?

All educational authorities in Victoria are bound by the provisions in the Act, which relevantly, prohibits unlawful discrimination on the basis of gender. Many co-educational schools seek to favour the enrolment of one gender over the other to maintain a balance of male and female students. However, successive decisions in the Victorian Civil and Administrative Tribunal (VCAT) have held that offering bursaries or scholarships, having separate waiting lists for different genders and offering placements, constitutes discrimination under the Act because it is treating a prospective student or student unfavourably on the basis of their gender.

Unless a school successfully obtains an exemption to discriminate under section 89 of the Act from VCAT, it will be at risk of a discrimination claim where it seeks to prioritise the enrolment of students on the basis of gender.

Next steps

If you are a school which would like to seek the flexibility to:

• structure waiting and enrolment lists to target prospective students of either gender, including have separate waiting lists;
• allocate student placements in a manner that prioritises students of a specific gender;
• offer enrolments, bursaries and scholarships targeted to a specific gender; and
• advertise specifically for male or female students to enter the school at any year level where there is an imbalance in male and female students,

we recommend that you consider seeking an exemption under the Act from VCAT to enable you to lawfully discriminate.

Given that many co-educational schools want to prioritise gender balance, it goes without saying that schools which can successfully maintain an equitable balance have a distinct competitive advantage over others .

How we can help

If you would like to explore your school’s legal options in lawfully maintaining a gender balance and furthering your strategic goals and objectives, please do not hesitate to contact us.

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^{[1] This is based on our analysis of co-educational schools in Victoria who have publicly available information regarding the ratio of their students.}

We have seen a significant increase in demand from organisations needing support in child safety investigations. Moores recently delivered both a seminar and webinar on the topic of running an effect child safety investigation with over 230 participants. The obligations to conduct an investigation vary from state to state.

In Victoria, the heads of entities are required to investigate and report reportable conduct to the Commission for Children and Young People (CCYP) under the Reportable Conduct Scheme. While organisations might be familiar with running investigations into workplace allegations, child safety allegations carry heightened safety risks and require a nuanced approach.

Here are some of our top tips for running an effective child safety investigation:

1. Keep child safety at the centre of the investigation
   
   When an organisation receives allegations regarding child safety, there are several significant considerations for the organisation.Ensuring the safety of all children, both in your care and out, should be your primary consideration.This may involve standing down the alleged perpetrator or putting in a safety management plan to ensure they have no contact with children.
    
2. Preparation is key
   
   Effective child safety investigations don’t happen by accident; they are the product of careful planning. If your organisation has never received a child safety allegation, it is still important to prepare for one.This can help take some of the pressure and stress out of responding to an allegation when it occurs.You can prepare by putting in place an investigation framework and a crisis management plan.You should also make sure your child safety policies and dispute resolution processes provide you with adequate powers to investigate and take disciplinary action for child safety breaches, consistent with your legal obligations. Keep in mind that the obligation to investigate may vary from state to state.
    
3. Work closely with regulators
   
   Before you begin your investigation, you will need to consider whether you are required to report to the police or the Department of Health and Human Services (DHHS). Other regulators may need to be involved as well such as CCYP and the Victorian Institute of Teaching (VIT). Keep in mind that each regulator will have a slightly different focus and standard of proof. Working cooperatively and proactively with authorities will help to ensure that the investigation stays on track. In particular, you should only interview parties involved after the police have interviewed the relevant parties and/or are comfortable with you commencing your investigation. Interviewing witnesses before the police may jeopardise a police investigation or prosecution, may enable witnesses to collude, and may provide an opportunity for the destruction of critical evidence.
    
4. Make sure your investigator is independent
   
   It is a fundamental principle of investigations that the investigator is independent and impartial.When an investigation is required under the Reportable Conduct Scheme, it is preferable to hire an external investigator. The recent case of Kerkofs v Abdallah (Human Rights) [2019] VCAT 259, albeit in a sexual harassment context, highlighted the importance of engaging an independent and suitably qualified investigator. In that case, the company was found vicariously liable and fined $150,000 for failing to properly investigate allegations of sexual misconduct by an employee.
    
5. Planning is critical when a child needs to be interviewed
   
   A child safety investigation often requires an interview with a child as either the alleged survivor or as a witness. The CCYP expects that the alleged survivor and any relevant witnesses are offered the opportunity to be interviewed.  However, it can also be traumatising and confronting for a child. Children should be invited to participate in the investigation, but not before you have considered the impact on their safety and wellbeing, implemented safeguards to ensure that they are supported, liaised with authorities and considered whether parental permission is necessary or appropriate. To minimise the adverse impact on the child, consider allowing them to have a support person, working with counsellors or child psychologists in planning the interview, using plain English and drafting open ended questions. Support should be offered to the child before, during and after the interview.
    
6. Draft your allegations carefully
   
   The allegations form the terms of reference for the investigation and need to be carefully drafted. Allegations should be clear and include the key facts in terms of who, what and when and where. They should not include emotive language and should be able to be either substantiated or unsubstantiated. Poorly drafted allegations could lead to a finding that the alleged perpetrator was not afforded procedural fairness, as in the case of Bann v Sunshine Coast Newspaper Company Ltd [2003] AIRC 915.
    
7. Put the allegations to the alleged perpetrator in writing
   
   A common error in child safety investigations, particularly those conducted internally, is that organisations put the allegations to the alleged perpetrator verbally, but not in writing.It is important for procedural fairness and natural justice that clearly particularised allegations are put to the alleged perpetrator in writing, that they are made aware of the potential breaches of any obligations or policies, and the potential consequences if adverse findings are made.
    
8. Maintain the confidentiality of all parties
   
   Whilst it is important to communicate with interested parties regarding the investigation and outcome, the confidentiality of all parties must be maintained.This is important to protect the privacy of the child, the witnesses, and the perpetrator. The stigma associated with child abuse can be significant, so communication which indicates that a person is responsible for child abuse before findings are made could put an organisation at risk of a defamation or unfair dismissal claim.The identity of children involved should also be kept highly confidential.
    
9. Hasten slowly
   
   Mistakes are often made when organisations rush an investigation in an attempt to quickly resolve the problem. Organisations need to ensure they are complying with natural justice principles and implementing appropriate safeguards to ensure the safety and wellbeing of individuals involved.  At the same time, investigations should be conducted efficiently. Regulators are often critical of organisations for taking too long to conduct investigations, especially when they are done internally by employees who have other responsibilities and insufficient experience.
    
10. Seek legal advice 
    
    Running a flawed investigation process can have a significant and detrimental impact on a child and others in your community, and carries significant legal, reputational and financial risks. We strongly encourage you to seek legal advice when allegations are made and an investigation is needed.We often see investigation reports where findings of law have been incorrectly made by investigators or employees without a proper legal basis.This could lead to claims being made against the organisation. Where the process is flawed, you may need to start an investigation again, which can traumatise a child further.Obtaining legal advice can also allow you to assert professional legal privilege over the investigation report if the independent investigator is briefed by a law firm. A law firm can also help you navigate the extensive child safety legislation and reporting requirements which are regularly changing and vary from state to state.

How we can help

Moores assists organisations across Australia to conduct child safety investigations in accordance with their legal requirements to achieve a satisfactory outcome. We can also provide training to up skill your staff in responding to and investigating child safety concerns.

If you would like to discuss this article with us further, or learn more about our child safety services, please do not hesitate to contact us.

Under a Bill introduced yesterday, religious and spiritual leaders will be added to law as mandatory reporters, and will no longer have the exemption of the confessional seal.

Additionally, cases dismissed under the previous limitation periods can now be brought , and courts will be empowered to set aside some historical settlements, if it is just and reasonable.  Therefore, there may be increased volume of claims and related liability issues.

Religious and spiritual organisations need to consider their ethical stance on the proposed changes, and ensure that policies, and their responses to allegations, are consistent with their ethos and the law.  They should also review historical settlements to gauge whether any may be set aside under the new laws or subject of an extension of the limitation period.

It is expected that the Bill will be given priority so that it comes into force as soon as possible.

The Bill

On Wednesday 14 August 2019, the Children Legislation Amendment Bill 2019 (Vic)(the Bill) was introduced by the Andrews Labor Government.

The Bill will enact one of the recommendations by the Royal Commission into Institutional Responses to Child Sexual Abuse (the Royal Commission).

Religious and spiritual leaders will join doctors, nurses, teachers, police, registered psychologists and other mandatory reporters as people who are required to report when they form a belief on reasonable grounds that a child is in need of protection.

Significantly, the Bill clarifies that disclosures of abuse made during religious confessions will not be exempt from reports as required under mandatory reporting or the failure to disclose offence.

A power has also been added to allow the Supreme Court to set aside some historical settlements, if it is just and reasonable.

Will it become law?

While the Bill is expected to pass both houses, several prominent religious figures have spoken out against the Bill, including Melbourne’s Catholic Archbishop Peter Comensoli. This article will outline the key provisions of the Bill and our recommendations for organisations in preparation.  

Background: The need for change

The seal of confession is regulated under canon law which states that “The sacramental seal is inviolable; therefore it is absolutely forbidden for a confessor to betray in any way a penitent in words or in any manner and for any reason.” This was replicated in the Evidence Act 2008 (Vic) and relied on by religious leaders to avoid reporting child abuse disclosures made in confessions, even after the failure to disclose obligation imposed on all adults in Victoria was introduced under the Crimes Act 1958 (Vic).

However, the Royal Commission and several other enquiries into child abuse have highlighted the devastating role the confession can play on ensuring child safety concerns are reported.

A prominent example is the case of Michael McArdle, a Catholic priest who was jailed in Queensland for over 60 instances of child abuse against young boys in 2004. It was revealed that he confessed these instances of abuse to up to 30 priests over 25 years, yet this was never reported to the police.

The Royal Commission also heard case studies where children and survivors had disclosed instances of abuse by priests during a confession and this was never reported. In some case studies, the children were told that they were the ones who had to seek forgiveness.

A small study commission by the Royal Commission of nine priests convicted of child abuse found that the confessional was seen as a ‘safe’ place to confess their abuse and seek forgiveness. The secrecy of the confessional space and the idea of ‘seeking forgiveness’ might have encouraged the abuse to continue and somehow seem permissible.

Laws in other states

Victoria is not the first state to introduce laws which prioritise child safety over the sanctity of the confessional.

We are seeing the first prosecutions taking place in other states such as Western Australia for failing to report offences.

South Australia became the first state in 2018 to legally require clergy to report child sexual abuse, even if revealed in confession. Failing to do so carries a penalty of up to $10,000 and potential prosecution. Similarly, ACT passed laws earlier this year that would require all adult to report child abuse, including priests even if disclosed during a confession.

In both states, the legislative changes were met with resistance from the Catholic Church, including several prominent leaders who vowed to uphold the sacramental importance of the confession notwithstanding the law and potential penalties.

Changes under the Bill

Under the first version of the Bill, the following key changes are proposed:

1. Persons in religious ministry will be added as a mandatory reporter under the Children, Youth and Families Act 2005 (Vic);
2. Clarifies that persons in religious ministry will not be able to rely on the religious confession privilege in the Evidence Act 2008 (Vic) to avoid the reporting requirements;
3. Clarifies that the failure to disclose requirement under the Crimes Act 1958 (Vic) includes an obligation to provide information even if disclosed in a religious confession setting (i.e. the religious confession privilege does not apply);
4. Amendment to the Limitations of Actions Act 1958 (Vic) to allow for actions in relation to death or personal injury arising from child abuse to be brought despite being dismissed due to the expiry of a limitation period or settled prior to the removal of limitation periods; and
5. Allows for the Supreme Court to set aside certain historic judgments and settlement agreements if it is satisfied that it is just and reasonable to do so.

The Bill also limits the right of appeal to VCAT for persons whose Working with Children Check application is rejected if they’ve been charged a serious sexual offence (Category A offence).

Additionally, it makes clarifications in relation to the Department of Health and Human Services’ (DHHS) role to share information, administer immunisations and protect non-indigenous children who have an Indigenous sibling under the Aboriginal Children in Aboriginal Care program. The Bill further amends the legislation relating to the Child Information Sharing Act and other privacy legislation to align with the above key changes.

Impact on organisations

The legislative changes to capture persons in religious ministry as mandatory reporters and the removal of religious confessional privilege in relating to child abuse reports will be significant for organisations. Failure to comply with the reporting requirements could lead to imprisonment of up to three years under the Crimes Act.

“Persons in religious ministry” is defined to mean a person appointed, ordained or otherwise recognised as a religious or spiritual leader in a religious institution. A religious institution will include any entity that operates under the auspices of any faith and provides activities, facilities, programs or services of any kind through which adults interact with children. This will capture church elders, priests, nuns, a religious brother or sister, ministers, imams, rabbis, monks and Salvation Army officers amongst others.

Next steps

The introduction of the Bill indicates an ongoing commitment by parliament to continue implementing the Royal Commission’s recommendations. Organisations should heed the message that child safety will continue to be a significant area of change and priority.

We recommend that organisations take the following next steps:

1. Child Safety Stance – religious institutions will need to decide what their position on the new Bill will be. This should be decided with board involvement and stakeholder consultation and once decided, communicated to all relevant employees and staff.
2. Review policies – in light of the changes under the Bill and the other changes we have seen in the child safety space, it is important that organisations review their child safety policy, code of conduct and reporting procedures to ensure they comply with legislative requirements.
3. Consider Risk Strategy on Historical Settlements: consider whether any historical settlements are at risk of being set aside, and take note of the extended limitation period, and the impact on the organisation’s broader child safety strategy, including its participation in the Redress Scheme and risk strategy.
4. Responding to allegations – organisation are dealing with an increased amount of child safety allegations, including difficult allegations such as historical allegations and child on child abuse. It is important that organisations are reviewing their processes for responding to these allegations, investigating concerns and training their staff.

Moores will continue to provide updates in relation to the Bill as it progresses through parliament.

How we can help

For more information on preparing your organisation’s response to child safety concerns, please do not hesitate to contact us.

The impact of social media on child safety is a growing concern that not even social media companies themselves can ignore. Most recently, Instagram has rolled out a trial in Australia to remove the number of likes being publicised on posts. This comes after a recent survey of 14-24 year olds found that Instagram was the worst app in terms of contributing to anxiety, depression, loneliness, bullying and body image. Instagram is not alone in its efforts to address the negative impacts of social media, with Facebook and Twitter also recently revamping its policies – but when it comes to child safety, is it enough?

What apps are in?

The most popular apps amongst children are constantly changing – currently Instagram, Snapchat and YouTube are the key apps used. However, we have also seen new apps emerge rapidly.

Some of these are:

• Yolo – released in May this year, the app was downloaded over 5 million times in its first month of release and remains on the most downloaded app list, particularly amongst young people. The App works with Snapchat and allows people to ask their followers questions that can be responded to anonymously. Like other anonymous apps such as Sarahah, there are concerns of the app being used for bullying. Extensive bullying occurring on Sarahah led to it being banned from Apple and Google’s app stores.
• FaceApp – now the top ranked app in 121 countries, FaceApp allows people to people to change their facial expressions, looks and age themselves. However, the terms and conditions grant FaceApp a licence to user’s photos, name and likeness for any purpose. It can also access a user’s camera in the background and all photos taken.
• The Game by Hot or Not – one of the original dating apps has been relaunched and aims to be more than just an app for ‘dating’ but also just for fun. The app allows individuals to upload a picture of themselves and users around them swipe ‘hot’ or ‘not’ and the user gets a rating. Similar to the app Yubo which is described as ‘Tinder for Teens’, the app raises concerns as there is no identity verification process and includes locational data.

Social media sites take action

It is becoming increasingly difficult for social media sites to ignore the negative aspects of their product. Instagram’s removal of the number of likes is being rolled out internationally as a way to remove the pressure associated with the app and posting online. Instagram has also added a new feature to tackle bullying by providing users with a pop up notice when negative language is detected in their post or comments. This is similar to a feature on Facebook which pops up with notices asking users if they are sure they want to post images that Facebook detects to contain inappropriate content.

Instagram will also be adding a new feature called “Restrict” which allows users to filer abusive comments without blocking an individual. This was due to feedback that young people are reluctant to block or unfollow people because they are afraid that it will escalate the bullying.

With the eSafety Commissioner having the power to fine corporates up to $525,000 for failing to remove an intimate age that is posted without consent, social media sites are taking more responsibility. However, there are still concerns that some social media apps such as SnapChat and anonymous apps such as Omegle and Whisper continue to protect the identity of its users, even when they are engaging in damaging behaviour.  

Impact on organisations

All organisations that work with children need to be aware of the impact that social media might have on their duty of care to keep children safe. Even conduct that occurs outside of the ‘hours’ that the children are in your care could lead to a duty of care issue for your organisation.

For example, the youngest person to be charged in Australia for bullying was a 13 year old girl in Cairns who used Snapchat to bully and threaten another girl in her after school sporting team. In another instance, a video of a child being physically beaten by other children was streamed live on TikTok,

Child safety concerns on social media are not limited to negative interactions between children. A swimming coach in Victoria was recently criticised for setting up an Instagram page for the swimming club and posting images of young children in their bathers without the parents’ knowledge or permission. These images could then be used by third parties as the Instagram page was public.

What should you do?

There is a lot of fear about social media, often which often results in organisations putting it in the ‘too hard’ basket. There are certainly challenges in managing the child safety risks associated with social media but in a post Royal Commission setting, organisations cannot fail to act.

As a starting point, we recommend that organisations that work with children take the following steps to mitigate the risks associated with social media use:

1. Check your policies and procedures – organisations should ensure that their Child Safety Policy, Child Safety Code of Conduct and Digital Safety Policy are up to date and adequately deal with social media risks. Often, organisation’s policies and procedures are not adapted to address digital aspects of child safety, which can lead to problems when the organisation is required to take action. For example, do your policies allow you to confiscate children’s phones if they engage in problematic behaviour?
2. Train your staff – when we speak with organisations, their staff are often lacking in their knowledge of children’s use of social media, and the extent to which they are permitted to contact them online. In a recent training session, a staff member discussed a child safety incident that occurred involving Yubo and admitted that she had heard children talking about it but did not know what the app was, otherwise she would have acted sooner. It is important that your staff know what the latest trends are so they know what to look for.
3. Discuss the issue with children – it is important to keep an open conversation and dialogue about social media and digital citizenship with children. This will allow you to learn the sites and apps the children in your care are using and increase the changes that reports will be made to you by children who notice inappropriate behaviour.

How we can help

For more information regarding child safety and social media, please do not hesitate to contact us.

On Monday 5 August 2019, the National Office for Child Safety released its Complaint Handling Guide (the Guide), developed with the NSW Ombudsman’s Office, the Australian Human Rights Commission and the e-Safety Commissioner amongst others. The message is clear – organisations need to be prepared for child safety complaints and allegations. The Guide makes it clear that receiving no complaints is not necessarily an indicator of a child safe environment. Rather, an organisation that empowers individuals, especially children and young people, to raise concerns and then effectively addresses the concerns is better placed to create a child safe environment.

Increasing rates of complaints

We are seeing an increase in the rates of child abuse reports across all sectors. In 2016-17, the Department of Health and Human Services (DHHS) received 110,987 reports. In 2017-18, it received 115,641 reports. Since 2014-15, the number of reports has risen by more than 20%. The Commission for Children and Young People (CCYP) received 850 reports in 2017-18 in the first year of the Reportable Conduct Scheme (the Scheme). The number of reports for 2018 -19 is expected to be higher.

The increase in the number of complaints is considered to be largely due to an increased awareness of child abuse and the importance of reporting, as opposed to increased rates of child abuse. The introduction of the Scheme has also lead to a broader range of child safety concerns being reported to organisations, including historical allegations and family violence incidents involving their employees. In this environment, if an organisation has not received a child safety concern yet, they should not assume that it cannot happen.

Lack of preparedness

In our experience and as reflected in the Guide, organisations often do not have in place the processes required to respond to complaints and concerns in a child-focused manner. This is despite it being a requirement under Principle 6 of the National Principles for Child Safe Organisations (National Principles) and Standard 5 of the Victorian Child Safe Standards.

The definition of a child safety concern or complaint encapsulates a range of concerns. Some examples include a complaint about:

• the conduct of an employee towards a child in your care;
• the conduct of an employee towards a child not in your care;
• a historical allegation about the conduct of an employee before they were an employee;
• the way your organisation handled a prior complaint;
• your organisation’s interaction with children; and
• the conduct of another adult or child in relation to a child in your care.

Each type of complaint will trigger different considerations and reporting requirements. Complaints can also be received in a range of ways, including from a child, a parent, a member of the public, another employee, an incident or anonymously. Organisations need to have in place procedures that are flexible to capture different types of complaints but also provide employees with guidance on how to respond in accordance with their child safety obligations.

Key messages of the Guide

The Guide provides a helpful overview of the different considerations that organisations need to be mindful of when responding to complaints. While it is no substitute for your own tailored complaints procedures and child safety documents, it provides a good starting point.

In particular, the Guide outlines the importance of creating a child-centred approach where the best interests of the child inform the organisation’s response. This includes putting strategies in place to empower children to raise their concerns and training staff and first responders on how to properly respond. The Guide also sets out nine key guidelines for organisations to consider. These are:

1. Embedding Children’s Rights, Safety and Wellbeing into the Complaints Process
2. Reporting Responsibilities
3. Sharing Information and Communicating with Stakeholders
4. Confidentiality and Privacy
5. Managing Risk – Complaints and Incidents
6. Conduct Investigations Involving Children and Young People
7. Being Fair and Objective
8. Explaining Outcomes and Review Options
9. Record Keeping and Complaints Data

It is clear from the Guide that responding to child safety complaints is complex and organisations need to find the right balance between protecting children, their reporting requirements, the investigation and their employment obligations.

Next steps

The key message is that while it is tempting for organisations to wait until they receive a complaint before they act, it is fundamentally important that organisations are putting in place processes to be prepared for allegations.

We recommend that organisations get ready by taking the steps below:

1. Review and implement – Organisations should review their current complaints handling process and child safety reporting process or put these in place. In particular, organisations should consider whether their complaints handling process is appropriate for child safety concerns, if the reporting process complies with their legal obligations state-to-state (particularly reportable conduct schemes) and if their process takes a child-centred approach.
2. Training – Aside from general training on your policies and procedures, tailored and intensive training should be provided to Child Safety Officers who may be required to make reports to regulatory authorities and first responders who are most likely to hear complaints. Training should be practical and include relevant case studies.
3. Empower children – Organisations should consider their current strategy for empowering children and if children in their care understand where to go for help and how to raise a complaint. This is in accordance with best practice and obligations under the Child Safe Standards.
4. Gap analysis and evaluation – Some organisations may have already experienced and responded to a child safety complaint. Where this is the case, it is important for organisations to evaluate their response and identify where the gaps in their policies and procedures are.

How we can help

Moores is experienced in supporting organisations responding to a child safety concern, including managing allegations under the Reportable Conduct Scheme. We also offer a range of training options to up-skill your employees on their child safety obligations.

For more information on preparing your organisation’s response to child safety concerns, please do not hesitate to contact us.